“We maintain a ‘buy’ rating on Kagara with the belief current management can deliver on their five year growth objective,” UBS said. “The equity raising helps de-risk growth plans which are heavily reliant on exploration success and new mine development. The sale of Lounge Lizard has the potential to provide further growth and funding flexibility.”
Goldman Sachs though is a little concerned about future funding.
“While we do accept that the current five year strategy for Kagara is the right thing to do we are cautious about the funding of this large exploration package which is required to increase the resource and reserve base and expand the life of existing (and to include the Mungana plant; half built ... ) operations,” Goldman Sachs said.
“The company will remain exposed to any potential weakness in base metal prices driven by current market concerns around Chinese demand, and will remain reliant upon monetising one (or both) of Lounge Lizard and Admiral Bay.”
KZL Price at posting:
28.5¢ Sentiment: ST Buy Disclosure: Held
